The yen continues to face downward pressure, and market intervention concerns remain difficult to dismiss.

Although the foreign exchange market remains highly alert to the possibility of Japanese government intervention, market participants generally expect the yen’s depreciation trend to continue. According to financial information platform Jin10, SMBC Nikko Securities strategist Rinto Maruyama noted in a recent report that under certain conditions, the yen still has room to weaken further.

Authorities’ Attitude Determines Market Expectations

Maruyama stated that if Japanese regulators maintain a negative or neutral stance toward the current yen depreciation, or if concerns over fiscal expansion intensify further, the market’s cautious attitude toward yen appreciation will significantly weaken. In other words, ambiguity in policy signals leaves room for the yen to continue depreciating. This policy uncertainty actually reinforces market expectations of a weaker yen.

Market Consensus: Yen’s Bullish Trend Is a Thing of the Past

Despite the constant threat of intervention, the strategist believes that a clear consensus has formed within the market—that the USD/JPY exchange rate remains on an upward trend. In other words, even with ongoing intervention concerns, the market’s bullish outlook on yen depreciation and bearish outlook on yen appreciation still dominates. This indicates that market expectations of intervention have been partially priced in, while pessimism about the yen’s fundamental outlook remains more entrenched.

Fundamental Factors Outweigh Policy Risks

Expectations of fiscal expansion and economic growth differentials are becoming the core factors suppressing the yen. Market participants seem to place greater emphasis on these long-term fundamental drivers, while pricing in short-term policy interventions relatively conservatively. This structural market characteristic suggests that expectations of yen depreciation are unlikely to quickly reverse due to the threat of intervention.